business news in context, analysis with attitude

MNB had a piece yesterday about Georgia's "PeachCare" program, which provides health insurance for uninsured children. A survey in Georgia showed that 10,261 of the 166,000 children covered by "PeachCare" have a parent working for Wal-Mart. According to the paper, the next largest employer mentioned in the survey was Publix - which employs parents responsible for 734 kids,

MNB user Ted Wakabayashi responded:

I have enjoyed reading your materials everyday. I would like to comment on Wal-Mart phenomenon in which the common argument is that Wal-Mart is lowering the living standard in the US. It is, however, the only one side of the story and I wonder if those under-paid people are not working for Wal-Mart they may be receiving public welfares anyway. I know many Wal-Mart associates who are single mothers or minority youths who cannot find the adequate job otherwise and are happy working for Wal-Mart. They seem to work harder and I think they are the essence of Wal-Mart's success. Sam Walton wrote in his biography that "Ordinary people doing extraordinary things..."

Another MNB user observed:

Let’s see the employers for all 166,000 kids or at least the ones with over 100 kids on the list. Might be shocking. The let’s ask why they are on the list.

Perhaps the parent has not qualified for benefits at Wal-Mart yet. These accusations merit a full understanding, not just an anti Wal-Mart sound bite.

MNB user David J. Livingston wrote:

Wal-Mart employees have such a large number of kids on the state sponsored health plan because they are such a large employer. Probably their ratio is per number of employees is no different than any other discount department store. What about Kmart and Target? What was their ratio? What about McDonalds?

Perhaps the taxpayer is footing the bill, but the taxpayer makes it back when they buy products at discounted prices at Wal-Mart. Also don't forget a lot of those taxpayers own Wal-Mart stock directly or indirectly in retirement or pension accounts and have certainly benefited. Doesn't Wal-Mart pay taxes too? It's impossible to compare Wal-Mart to Publix. If not for the grace of Wal-Mart, many of their employees would have no job at all and would be on welfare. Wal-Mart does an excellent job in hiring people who are considered unemployable. Working for a company like Publix would be beyond the abilities of most Wal-Mart employees. What a lot of these Wal-Mart bashing articles never mention is the fact that most Wal-Mart employees do not have the skills or physical presentation needed to be able to work in higher paying positions. Unfortunately that is a fact that is too politically incorrect for Wal-Mart to use themselves as an alibi.

Let's just take the notion that the money taxpayers spend to cover these kids' insurance costs is made up by the lower prices they get at Wal-Mart.

Couldn't you take it from the opposite direction? That Wal-Mart's low prices aren't as low as it would have you believe because there are higher compensating costs elsewhere? That these low prices can be, in fact, illusory?

Yet another MNB user chimed in:

Let's ask some more questions and look at another, somewhat different answer.

What's the cost to Georgia taxpayers if Wal-Mart hadn't employed the parents? What's the ratio of children per employee at Wal-Mart vs. Publix?

No matter what is the cost, as long as the employees had lived in GA, some taxpayers would have picked up some of the cost.

We have trouble with this logic. Public funds pay to keep these kids insured, and we're supposed to think that's okay because if the parents didn’t have jobs at Wal-Mart, the same public funds would be spent to cover them?

We understand that there are different ways to look at this thing. But it used to be that jobs in retailing were a way to enter the middle class, a way to make enough money to eventually have a home, raise a family, get your kids an education, and keep them healthy.

That seems to be changing. And that isn’t a good thing by any measurement.

We wrote yesterday that the new issue of The New Yorker has a couple of intriguing articles about the nature of choice. Which prompted MNB user Glen Terbeek to write:

Maybe The New Yorker ought to be required reading for the industry!
There is no question, that if the retailer is to be successful in the future, then they need to be AGENTS for their local shoppers; winning their loyalty by selecting and recommending the products that anticipate their desires and wants, while eliminating clutter. In other words, creating value above and beyond distribution value. There are many examples of very successful food and other retailers that do just that.

But wait a minute. The New Yorker obviously doesn't understand slotting allowances, other trade dollars, supply chain productivity, centralized organizations, difficult labor problems, competition from the "Big Guy", and ..............! How could they ever become Agents for their shoppers?

I would suggest that the supermarket industry, in general, has abdicated its shoppers Agentry responsibility; and in fact, have become the Agents of the manufacturers in stead. The fact that trade dollars are about twice the pretax income of the supermarket industry pretty well summarize the argument.

No argument.
KC's View: